State of the Cityt: Hizonner walks careful line on taxes, bond projects, layoffs

Mayor Bell's annual State of the City address last night had a few eyebrow-raising moments -- certainly more than last year, when any concerns over the economy were subsumed well below issues of economizing on water.

The full text of the speech is posted at the City's web site, and it's worth a read.

The mayor deviated slightly from the text of the speech several times, most notably when making a statement on property tax rates. In his presentation, Bell gestured towards himself and emphasized (rightly) that he was speaking only for his own opinion on tax rates. The text of the speech reads:

"As you know the property tax and sales tax are our primary sources of revenue for operating City government. With retail sales flat or decreasing it doesn’t appear that we will see an increase in sales tax revenue. It also will be very unlikely that for the FY 2009 – 2010 budget, we will increase the property tax rate in this economic environment."

Perhaps an unsurprising statement, what with the notorious tax-hawk Dr. Allison from the DCABP in the audience, who was reported widely to have put pressure on elected officials for last year's hard line on property tax rates.

Yet it also comes at a time when the mayor is calling for a continuation of capital spending, much of it funded by bonds -- bonds which have to carry debt service and repayment plans.

Bell made a concession on these projects by warning about investing too much in cap-ex that would involve ongoing operating expenses, but he couched even that warning with an important loophole:

"We must find ways to do more with less, or more with the same. As we prepare to develop the budget, I would suggest that we prioritize our core services as our top priorities. Next we would chose those capital projects which we can afford and which will provide jobs in their implementation and not require additional operating expenses, once they are completed, beyond which we had identified funding to support those capital investments."

Our first thought on hearing the first half of the capital projects sentence was, "Hey, didn't the mayor just talk about the Holton School renovation to a rec center, and about wanting to break ground on the Walltown Recreation Center come spring?"

On the flip side, the number of staff allocated in the City's budget for rec centers and neighborhood centers combined increased from 23 in FY07, to 24 in FY08, to 29 this year. It's not clear whether those numbers include the staffing needed to operate the new facilities. The H-S noted recently that operating cost concerns could be one factor derailing the purchase of the old Trinity Ave. YMCA from Duke University.

Perhaps the most relevant news to City employees was a warning that layoffs aren't out of the question given the economic situation. Though this year's employee lunch is still on, Bell alerted staff and residents alike that tougher times would be coming:

"I don’t want to scare anyone with my remarks, but all city employees should be aware that we are entering a period of economic uncertainty that many of us have not experienced. It is therefore important that all of us look to find new and effective ways of performing our jobs more efficiently and with reduced costs wherever. Notice I said perform our jobs – implied in that statement is that we will all continue to have jobs which are no certainty. I am sure that the administration and the council will work hard to see that we can minimize any layoffs, but nothing is promised, so it behooves all of us to work together to keep the City family together. And I know that we can do that."

In other news from the speech, the mayor:

• Called for local taxing authority to pay for transit service
• Tentatively supported a planning effort -- and, extemporaneously, emphasized "planning" with a smile and a knowing look to an audience member -- for an east-west trolley or streetcar service that could connect areas like Durham Tech, NCCU, downtown, and Duke
• Noted that 27 miles of street resurfacing would begin this spring
• Highlighted Durham's leadership in environmental issues and a goal of becoming a center for "green industry" jobs, given the likely federal interest in such issues under the Obama administration
• Noted that budget reduction plans of 3-10% would be made for departments this year
• Highlighted ongoing water and sewer infrastructure investments to be ready for the next drought even as "the drought of 2007 and 2008 fades in the minds of many of us"
• Emphasized ongoing efforts in North-East Central Durham, including a partnership to bring a grant- and university-supported community newspaper/web publication written by local youth to the area
• Noted the public-private partnership with Craig Davis Properties for the renovation of the Durham Centre parking deck, which will improve circulation in the notoriously-difficult deck, add a green roof and install LED lighting

See more at the Herald-Sun web site.

Comments

[Todd]

It also struck me as odd that Bell would talk about reducting operating expenses at the same time that he is touting capital investments in new rec centers that will need to be staffed. I guess the Trinity Ave rec center is the odd man out since capital improvements are not needed there.

Is the budget shortfall for next year all due to a decrease in sales tax revenue? Not sure I understand how we get from 5.5 million to 40 million there, or why raising property taxes is completely out of the question.

Durham's reliance on bonds for capital spending - and even basic maintenance - is an expensive habit. The bonds do have to be repaid, with interest.

Durham should consider designating a few cents of the property tax rate to pay up front for capital projects that are really just maintenance - paint, HVAC, roof repairs, lighting repairs, street paving. That's not the kind of stuff we should be paying for over 20 years.

[TT]

Anyone have the skinny on the trolley comments?

[Tanner Lovelace]

"27 miles of street resurfacing"

I'd like to know just why the city doesn't pay for road resurfacing as part of normal maintenance. Durham roads, frankly, are horrible (in general) and I believe that really hurts us in trying to get people and business to the area. I'd much rather see a full-time position in the city and county governments who's only responsibility is to make sure the roads are paved on time so they don't get as messed up as they are now.